Focus on long-awaited Medicaid expansion after budget deal reached

RALEIGH, N.C. (WTVD) -- Passing North Carolina's budget will remain the last hurdle for the state to expand Medicaid to potentially cover 600,000 adults who don't qualify or make enough for health insurance now that an effort to link it to authorizing more casinos is off the table.

Expansion appears back on a smoother glidepath after Republican legislative leaders said late Tuesday that they would stick to language within the landmark Medicaid expansion bill that Democratic Gov. Roy Cooper signed in March. That law said Medicaid would take effect only after the state budget covering this fiscal year was enacted.

The final negotiated two-year spending plan will be voted on Thursday and Friday, then it heads to Cooper's desk.

That's good news for Lisa Franklin, who has lacked Medicaid since her son turned 18 earlier this year but is dealing with liver failure and the possibility of a transplant while facing medical debt. She traveled Wednesday to the legislative offices of Senate leader Phil Berger and House Speaker Tim Moore to make the case for expansion to help people like her.

"I've got lots of tests and other stuff coming up that I can't have done. I'm having to pick and choose what tests and procedures that I can do," Franklin, 41, of Forest City, said after speaking to a Berger staffer. "We need this Medicaid expansion enacted in North Carolina, and we need it now."

North Carolina Republican leaders announced Tuesday night that the GOP-controlled General Assembly had reached an agreement on a state budget.

The plan does not include funding for casinos.

The final budget won't include gambling legislation but will trigger Medicaid expansion to cover hundreds of thousands of adults.

"We think this is the best, most prudent way for us to move forward," Berger, R-Rockingham, told reporters. It's my belief that the emotion got the better of the discussion and it was time for us to get the other things taken care of."

The nearly $30 billion spending plan will advance for votes in the State Senate and House.

Just because the budget's enactment still will get Medicaid expansion - one of Cooper's top priorities - across the finish line doesn't mean it will be easy for Democrats to vote for the plan. It's going to include Republican priorities on reducing taxes and expanding school choice, as well as items that strengthen power of the legislature and the courts.

"We want Medicaid expansion, but not at the price of so many horrible things," state Rep. Marcia Morey, a Durham County Democrat, said Wednesday.

Moore, R-Cleveland, and Berger called a news conference Tuesday evening to announce the agreement. At the hastily arranged Legislative Building briefing, Berger and Moore said that efforts to advance this type of gambling were over for the immediate future.

"This issue nor one single issue should hold up the budget. So collectively it was determined to move forward with the budget," Moore said.

House and Senate GOP lawmakers had been grappling with how to get the votes necessary to enact language to authorize four new casinos and legitimize and regulate video gambling machines. Social conservatives in the state House balked earlier this month at the idea from Senate Republicans to insert those provisions into the two-year spending plan.

Then in recent days, there was talk of putting the gambling items in a bill separate from the budget and requiring its passage for Medicaid expansion to finally occur. But that threatened a landmark health care deal that Democratic Gov. Roy Cooper had reached six months ago with GOP legislators, who had until recently been set against accepting expansion through the 2010 federal health care law.

Nearly all of Cooper's Democratic allies in the legislature wouldn't go along with the idea, which along with Republican holdouts threatened to take down the bill.

Within the House Republican caucus, "clearly there were there were differences of opinion and at the end of the day, we felt like this issue and no one single issue should hold up the budget," Moore said.

Expansion is considered a top priority of Cooper and his legislative allies. Those lawmakers opposed the 11th-hour effort to link it with gambling, arguing that it broke the promise Republicans essentially made within an expansion law that Cooper signed in March that stated enacting a budget law was required for expansion to start. And enough Republicans were still unhappy with the gambling efforts contained within to threaten to sink the measure.

Now, "Medicaid expansion will still be contingent on the budget becoming law," Berger said.

Strange bedfellows -- Democrats and Christian conservatives -- celebrated their victory.

"For the last few days, House and Senate Dems have stood united against casinos and for Medicaid expansion," Sen. Jay Chaudhuri, a Wake County Democrat, wrote in a social media post. "Today, we showed the state why Dems still matter."

And John Rustin with the North Carolina Family Policy Council praised legislators "who stood their ground, under extreme pressure, to protect our state from the ravages of gambling, gambling addiction, and the predatory gambling industry."

The right-leaning NC Values Coalition also applauded the legislators' decision to separate the budget from the legalization of casinos.

"NC Values Coalition is pleased that legalization of casinos and video lottery terminals is no longer a threat to funding for pregnancy care centers or Universal Opportunity Scholarships in the budget, and we thank lawmakers who stood against predatory gambling," said NCVC Executive Director Tami Fitzgerald, who added that "predatory gambling erodes the social fabric of communities and hurts families, especially the poor."

Moore and Berger said details of the final two-year spending plan would now be released on Wednesday, with floor votes on Thursday and Friday. They both anticipated full Republican support for the budget bill, with Moore expecting Democratic votes as well.

Republicans hold narrow veto-proof majorities in both chambers. The final budget, however, will carry many right-leaning provisions that Cooper and many Democrats will find difficult to swallow.

A state budget was supposed to be in place when the new fiscal year began on July 1, but negotiations slowed during the summer because of the extent of income tax rate reductions and how to distribute billions of dollars for initiatives and programs.

North Carolina already has three casinos operated by the Eastern Band of Cherokee Indians and the Catawba Indian Nation. The gambling proposal would have created "rural tourism districts" where gambling venues and other developments could have occurred.

While legislators have said three casinos could have been built in Anson, Nash and Rockingham counties, the language allowed other options. A fourth could have been operated by the Lumbee tribe.

Developers would have agreed at each location to generate at least 1,750 jobs and $500 million in private investment. Operators of video gambling machines envisioned in the proposal as being legalized statewide would have been licensed by the state lottery commission.

Fiscal analyses by General Assembly staff estimated the state coffers would have benefitted by several hundred million dollars annually.

Berger, who is from Rockingham County, has been among the most consistent and vocal supporters of the rural casino districts, citing the success of a casino in nearby Danville, Virginia.

"That money being spent in Virginia is still largely coming from North Carolina and will continue to do so," Berger said.

During Tuesday's news conference, Berger said people who talk up the need to improve rural economies opposed an effort that would have created more than 5,000 good-paying jobs and increased local tax bases.

"When we have a proposal that would create over 5,000 jobs, good paying jobs, increased tax base in rural NC, these same folks come out adamantly opposed to it," Berger said. "It was just pretty clear that the facts were almost beside the point as to what those proposals would do for rural areas," Berger said. "I've learned that in an environment like that, you're unlikely to make any progress."

The individual income tax rate would drop from the current 4.75% to 3.99% by 2026, rather than the 2027 date currently in state law. And it could drop as low as 2.49% in the years after if revenue collection thresholds are met.

The program giving taxpayer-funded scholarships to children in low- and middle-income families to attend private schools would now be available to all families with K-12 students.

Rank-and-file state employees would get a 4% raise this year and a 3% raise next year, while average teacher salaries would grow by at least 7% over two years. The plan also sets aside $2 billion for 200 water and wastewater infrastructure projects.

That change is something Mitch Kokai, a political analyst with the conservative John Locke Foundation, said he believes will greatly benefit North Carolina's ability to bring more business into the state.

"There are some companies that in years past -- prior to say 2011 -- would look at North Carolina, they look at the top individual income tax rate and just say, 'no, it's too high. We're not even going to move them on to the second stage of discussions.' We're now at a point where our individual income tax rate is very competitive," he said.

However, Alexandra Sirota with the nonprofit NC Budget & Tax Center said that type of tax cut more greatly helps the highest earners in the state.

"Reducing income taxes doesn't address the underlying issues, because so many families pay the majority of their taxes through the sales tax. When we focus only on the income tax, we're really missing what is a huge load that working people are carrying across the state," she said.

Democratic Rep. Laura Budd of Mecklenburg County said this budget process should have been straightforward.

"It took a massive outcry from the public protesting their deceitful behavior to begin to think about doing the right thing," Budd said.

The Associated Press contributed.